The ringgit opened slightly lower against the US dollar on Friday as stronger-than-expected US economic data boosted the greenback and raised expectations of a potential interest rate hike by the Federal Reserve.
Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the US producer price index (PPI) climbed 5.4% year-on-year in August, up from 4.8% in July and above the market consensus of 5.3%.
Core PPI also increased to 4.6% from 4.3% previously, while the US Dollar Index (DXY) rose 0.26% to 99.077 points.
“It seems businesses are inclined to pass on their rising costs to consumers, which means that the consumer price index (CPI) could stay elevated when it is published tonight.
“Hence, the potential US interest rate hike thesis is gaining momentum, leading to a higher US Dollar,” he told Bernama.
Meanwhile, Quintex Intel global strategist Stephen Innes said the stronger-than-expected PPI reading had pushed the probability of a US Federal Reserve rate hike next week to around 75%.
He said the development continued to put some pressure on the ringgit, particularly as global equities weakened and broader risk sentiment turned defensive.
“Against the broader US dollar, I would not expect the ringgit to weaken too dramatically.
“It continues to draw support from a more hawkish Bank Negara Malaysia and relatively resilient domestic economic indicators, benefiting from investment and export activity linked to the artificial intelligence boom,” he said.
At 8am, the ringgit eased to 4.0680/4.0745 against the US dollar, compared with Thursday’s close of 4.0630/4.0670.
However, the local currency traded higher against most major currencies at the opening.
The ringgit strengthened against the Japanese yen to 2.6337/2.6381 from 2.6431/2.6459, while it edged up against the euro to 4.7238/4.7313 from 4.7269/4.7315.
It also gained against the British pound, improving to 5.4967/5.5055 from 5.5046/5.5100 previously.
Against regional currencies, the ringgit traded mixed.
It strengthened against the Singapore dollar to 3.2082/3.2136 from 3.2113/3.2148 and gained against the Thai baht to 12.2696/12.2948 from 12.3331/12.3497.
The local note was little changed against the Indonesian rupiah at 231.8/232.3 compared with 231.5/231.8 previously.
However, it slipped against the Philippine peso to 6.50/6.52 from 6.49/6.50.
